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An Analysis of Mining Options and Leases

Robert W. Swenson, Proceedings of 8th Annual Rocky Mountain Mineral Law Institute (1963)

In approaching the subject of mining leases and options, I thought it would be helpful to secure representative samples of hard minerals leases used in different parts of the United States. With the assistance of two law students, a fairly sizable collection of leases was acquired in the hope that we would be able to arrive at some generalizations about mining leases. The results of our analysis were most disappointing. There was little uniformity, even on provisions we had thought would be standard. The lack of standardization doubtless stems from the fact that the generic term mining agreements includes a multitude of different types of transactions. Whether an agreement is in fact a mining lease or something else presumably depends upon the intention of the parties as it is manifested in the instrument. The word presumably is used advisedly because the case law presents a bewildering mass of inconsistent decisions on the interpretation of these documents. Assuming, however, that it is possible to ascertain from the agreement what the parties intend and that their intention is the proper criterion for determining the type of interest created, a mining agreement (using the term in the broad sense) may, if it is rather informal, constitute merely a grubstake or other employment contract,1 or it may create [48] a revocable2 or irrevocable license.3 On the other hand, a more for